Will the Budget give a fillip to welfare and agriculture? - Hindustan Times
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Will the Budget give a fillip to welfare and agriculture?

Feb 02, 2023 12:56 PM IST

Flagship schemes such as Jal Jeevan Mission and Pradhan Mantri Awas Yojna will not just enhance the quality of life of but also the political traction for the government with the beneficiaries

Improving the quality of life has taken priority over providing income relief . Counter-cyclical components such as food and fertilizer subsidies and MGNREGS spending have been brought down significantly. The cumulative reduction in total subsidy and MGNREGS allocation between 2022-23 (RE) and 2023-24 (BE) is 1.76 lakh crore. Entitlements under the PM-KISAN scheme have not been increased. This means that in real terms they are significantly lower than what they were when the programme was announced in 2019.

Workers unload rice bags from a truck at civil supplies godown in Hyderabad. (AP) PREMIUM
Workers unload rice bags from a truck at civil supplies godown in Hyderabad. (AP)

Also Read: Will the Budget manage the fisc?

On the other hand, the government’s (at the moment) flagship Jal Jeevan Mission scheme has seen an increase of 15,000 crore to 70,000 crore. Similarly, the Pradhan Mantri Awas Yojna will continue to see a significant allocation of 79,590 crore. Both of these schemes have allocations larger than MGNREGS. These schemes will not just enhance the quality of life of but also the political traction for the government with the beneficiaries, whose numbers run into tens of millions now.

The government’s (at the moment) flagship Jal Jeevan Mission scheme has seen an increase of ₹15,000 crore to ₹70,000 crore.
The government’s (at the moment) flagship Jal Jeevan Mission scheme has seen an increase of ₹15,000 crore to ₹70,000 crore.

To be sure, agriculture is one sector where the budget has said more in terms of intent rather than monetary allocations. The attention given to the newly established ministry of cooperatives in the budget speech suggests that the government has done a quick rethink on its agenda of pushing formalisation within the rural economy after it had to take back the farm laws due to popular protests. Rather than outsource this task to big capital, which was perhaps the biggest reason for backlash against the farm laws, the new approach seems to bank on expansion and “disciplining” of cooperatives in the rural economy.

Read: Will the Budget boost consumption?

The speech talks about things such as setting up “large producer enterprises or collectives with each having several thousand members and managed professionally”, adopting a “cluster-based and value chain approach through Public Private Partnerships (PPP)” to enhance the productivity of extra-long staple cotton and “a plan to set up massive decentralised storage capacity”. These are all objectives that the farm laws hoped to achieve via the corporate sector route. The fact that the ministry of cooperation is bringing model laws and preparing a computerised database of primary agriculture cooperative societies, underlines the government’s plans to push the agenda of improving compliance in the cooperative sector. Its economic benefits notwithstanding, this also comes with a realpolitik advantage. Agricultural cooperatives are a critical source of financial might of opposition parties in some key states.

Read: Will the Budget nudge growth?

What will be the net impact of the budget on agriculture and rural economy? If the reduction in food subsidy sees a concomitant reduction in government procurement and MGNREGS allocations are closer to the estimated numbers, rural incomes might come under squeeze. It is important to note that spending on welfare schemes such as housing and tap water does not boost incomes and therefore consumption spending. This might generate headwinds to rural demand.

Perhaps the in-built insurance the government might have factored is the assumption that cereal prices will continue to maintain the existing high inflation trajectory and a moderation in non-food prices will soften the budgetary squeeze by a slightly favourable movement in the terms of trade for agriculture. All this scenario building will depend a lot on the performance of this year’s monsoon, which is becoming more and more unpredictable with the worsening climate crisis.

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